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Groupon's 1Q'13 Investor Presentation deck, pulled from Groupon's IR page.

Groupon's 1Q'13 Investor Presentation deck, pulled from Groupon's IR page.

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Grpn1 q13 investor_presentation Grpn1 q13 investor_presentation Presentation Transcript

  • 1Q13 Earnings DeckMay, 2013
  • 2The statements contained in this presentation that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed.The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statementsinclude, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy; responding tochanges in the market; effectively dealing with challenges arising from our international operations; retaining existing customersand adding new customers; retaining existing merchant partners and adding new merchant partners; incurring expenses as weexpand our business; competing against smaller competitors and competitors with more financial resources than us; maintainingfavorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment; integrating ourtechnology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act andregulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches;protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality;payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulationsassociated with being a public company; and our ability to raise capital if necessary. We urge you to refer to the factors includedunder the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” inthe company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained byvisiting the company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’sactual results could differ materially from those predicted or implied and reported results should not be considered an indication offuture performance.You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that theexpectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels ofactivity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur.Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of May 8, 2013. Groupon undertakes noobligation to update publicly any forward-looking statements for any reason after the date of this presentation to conform thesestatements to actual results or to changes in its expectations.Additional information relating to certain of our financial measures contained herein is available in our most recent earningsrelease and at our website at investor.groupon.com.Forward-Looking Statements
  • 3Mission:To be the world’s commerce operating system,increasing consumer buying power whiledriving more business to merchants through price and discovery.
  • Areas of Focus4 Having evolved from one city to over one thousand, from a few customers to over41 million, we are now focused on our next phase of evolution, building a localplatform worldwide.There are three areaswe’re focused on to capitalizeon this opportunity: Mobile Pull One Playbook~60M local merchants worldwide, ~18Min our core categories,we have only featured >500,000 to date1(1) Localeze/Neustar & Factual.com Business Listings
  • Mobile: continuing to transform our business5 More than 40 million people worldwide have downloaded our mobile apps so far Over 7 million downloaded our mobile apps in Q1 alone In March 2013, 45% of North American transactions were completed on mobile devices, compared withnearly 30% in March 2012; International mobile mix is lower, but growing at a faster rate0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%January ‘11January ‘13October ’12July ’12April ’12January ’12October ‘11July ’11April ’11March ‘13North America Mobile Transaction MixMonthly, January 2011 to March 2013 (% of transactions)
  • Pull: meeting customer demand by expanding beyondemail (“Push”) to search (“Pull”)6IPO March 2013Nearly 40,000 activedeals in North America In the first quarter, less than 45% of our transactions inNorth America came from email Over 50% of our local transaction volume in North Americacomes not from new deals that we feature on any given day,but from our Deal Bank inventory In March, over 60% of the merchant contracts we signed inNorth America opted to feature in our Pull marketplace,with a monthly recurring deal~1,000 active dealsworldwide
  • One Playbook: rolling out technology internationally thathas driven improvement in North America7North America InternationalWorld-class customer andmerchant satisfactionCustomer and merchantsatisfaction below N.A., butmaking continued progress(1) Shading is for illustrative purposes only; rollout of technology/tools is in various stages of progress globally.(2) Based on customer and merchant satisfaction scores per ForeSee Customer and Merchant Satisfaction Surveys, March 2013 (surveys commissioned by Groupon); North America scorescomprise the U.S. score, and International is comprised of the average of the scores of the international countries surveyed.Sales WorkbenchLead management interface for contacting merchantsCoffeeSales intelligence dashboard, includes return on investment calculatorSmartDeals / Deal BankPersonalization algorithm and relevancy engine /Perpetual inventory systemDeal WizardContract configuration andcapacity managementQuantum LeadNext-gen leadmanagement system221
  • Non-Financial Metrics8UnitsUnit Sales grew 4% YoYglobally in 1Q13, to 45M-18%+37%Active Customers44%41.058%39.51Q1260% 59%41.742%56%38.040%2Q12 4Q123Q1240%1Q1360%36.941%InternationalNorth AmericaSpend per Average Active Customer156 151 152 1511751491381291Q121482Q12 1Q134Q123Q12Active DealsIPO March 2013Nearly 40,000 active deals in NA,up from ~1,000 worldwideat the time of the IPOYoY by Segment197NAIntl(1) Units reflect vouchers and products ordered before cancellations and refunds.(2) Active customers reflect the total number of accounts who have purchased Groupons during the trailing twelve months.(3) Spend per average active customer reflects the total gross billings generated in the trailing twelve months per average active customer over that period.(4) Active deals reflect the number of daily featured and Deal Bank deals offered on average at the end of the quarter.1 23 4
  • Financial Summary - Consolidated91Q12 3Q122Q12$1,520$559$638$1,355$568$1,287$569$1,2184Q12 1Q13$601$1,408Gross Billings RevenueGross Billings & RevenueUSD, Millions$40$46$25$(13)$211Q12 3Q122Q12 4Q12 1Q13Operating Income (Loss)USD, Millions+4% Y/Y+8% Y/Y
  • Expense Summary - Consolidated101Q13$1194Q12$1353Q12$1822Q12$2821Q12$222Cost of RevenueUSD, Millions1Q134Q123Q12$50$711Q12 2Q12$88$61$117MarketingUSD, Millions1Q12$284 $288$300 $308 $3083Q12 1Q132Q12 4Q12Selling, General & AdministrativeUSD, MillionsStock Compensation and Acquisition-RelatedUSD, Millions$30$27$252Q12 4Q12 1Q131Q12 3Q12$28 $2521% 24% 32% 44% 37% 21% 16% 12% 10% 8%51% 53% 51% 48% 51% 5% 4% 4% 4% 5%% of Revenue
  • -10%0%10%20%30%40%50%60%$(10)$-$10$20$30$40$501Q12 2Q12 3Q12 4Q12 1Q130%10%20%30%40%50%$-$10$20$30$40$501Q12 2Q12 3Q12 4Q12 1Q13Financial Summary – Segment111Q13$3404Q12$3753Q12$2922Q12$2601Q12$239North AmericaUSD, MillionsSegment Operating Income and Margin$431Q13$40$17$39$411Q12 3Q12 4Q12$262$263$277$308$3211Q134Q123Q122Q121Q12$291Q13$27$(3)$11 $101Q12 2Q12 3Q12 4Q12Segment Operating Income (Loss) and Margin+23% Y/Y9%9%(1)%4% 4%-9% Y/Y17%17%13% 12%5%Gross Billings and RevenueInternationalUSD, MillionsGross Billings and Revenue(1) Represents segment revenue less cost of revenue and operating expenses, excluding stock-based compensation and acquisition-related expense (benefit), net, in absolute dollars and asa percentage of segment revenue.1 1+42% Y/Y$681$719$552$548$554$726$802$666$738$801-18% Y/YGross Billings Revenue Gross Billings Revenue2Q12
  • 0%5%10%15%20%25%30%35%40%$-$50$100$150$200$250$300$350$400$450$5001Q12 2Q12 3Q12 4Q12 1Q131Q12 2Q12 3Q12 4Q12 1Q13Financial Summary - Category12$1,52012%59%56%$1,28731%36%52%$1,2183Q12 4Q1213%12%2Q12$1,35513%1Q1265%21%66%23%28%13%1Q13$1,408Gross BillingsUSD, MillionsGross Profit and Gross MarginUSD, Millions1Q139%2Q12 3Q12$379$38722%68%4Q1216%10%1Q12$440 $4339%17%74%16%9% 10%$35669%23%74%74%32% 27%34%32% 23%Travel & OtherGoodsLocal Gross Margin % of Billings(1) Gross margin is defined as gross profit as a percent of gross billings in order to eliminate the differences in gross versus net presentation of revenue.11
  • Financial Summary – Local13North AmericaUSD, MillionsInternationalUSD, Millions57%$140 $149$123 $119$146$429$413$356$430$45033%36%35%28%32%0%10%20%30%40%50%60%$-$50$100$150$200$250$300$350$400$450$5001Q12 2Q12 3Q12 4Q12 1Q13$186 $170$140 $124 $136$466$423$328$369 $37940% 40%43%34%36%0%10%20%30%40%50%60%$-$50$100$150$200$250$300$350$400$450$5001Q12 2Q12 3Q12 4Q12 1Q13Gross ProfitBillings Gross Margin % of Billings1(1) Local represents deals from local merchants, deals with national merchants, and through local events (i.e., GrouponLive deals).(2) Gross margin is defined as gross profit as a percent of gross billings in order to eliminate the differences in gross versus net presentation of revenue.2
  • Financial Summary – Goods14North AmericaUSD, MillionsInternationalUSD, Millions$18 $15$28 $23 $12$78$93$152$241$16524%16%18%9%8%0%10%20%30%40%50%60%70%80%$(25)$25$75$125$175$225$2751Q12 2Q12 3Q12 4Q12 1Q13$53 $60 $60 $56 $47$207$199$223$301$22726%30%27%19% 21%0%10%20%30%40%50%60%70%80%$-$50$100$150$200$250$300$3501Q12 2Q12 3Q12 4Q12 1Q13Gross ProfitBillings Gross Margin % of Billings1(1) Gross margin is defined as gross profit as a percent of gross billings in order to eliminate the differences in gross versus net presentation of revenue.
  • Financial Summary – Travel and Other15North AmericaUSD, MillionsInternationalUSD, Millions57%$11 $10 $9 $10$14$46$43 $45$48$6624% 24%21%20%22%0%5%10%15%20%25%30%35%40%45%50%$-$10$20$30$40$50$60$70$801Q12 2Q12 3Q12 4Q12 1Q13$31 $30 $25 $24 $24$128$116 $114$132$12025%26%22%18%20%0%5%10%15%20%25%30%35%40%45%50%$-$20$40$60$80$100$120$1401Q12 2Q12 3Q12 4Q12 1Q13Gross ProfitBillings Gross Margin % of Billings(1) Gross margin is defined as gross profit as a percent of gross billings in order to eliminate the differences in gross versus net presentation of revenue.1
  • Financial Summary – Cash Flow16Operating Cash Flow (TTM)USD, MillionsFree Cash Flow (TTM)USD, Millions57%2$310$330$300$171$95$(25)$25$75$125$175$225$275$325$375$4251Q12 2Q12 3Q12 4Q12 1Q13(1) TTM represents the trailing twelve month period.(2) Free cash flow is a non-GAAP financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, “Net cash provided by operating activities.”$356$393$370$267$192$(25)$25$75$125$175$225$275$325$375$4251Q12 2Q12 3Q12 4Q12 1Q131
  • Other Financial Highlights17($ millions) 12/31/11GAAP EPS $(0.01)EPS excluding stock-based compensationand acquisition-related expense, net$0.03Operating Cash Flow $9MOperating Cash Flow TTM $192MFree Cash Flow $(6)MFree Cash Flow TTM $95MCash and Cash Equivalents $1,166M1Q 2013(1) Earnings per share excluding stock-based compensation and acquisition-related expense, net is a non-GAAP financial measure. See appendix for a reconciliation to the most comparableU.S. GAAP financial measure, “Net loss per share.”(2) Free cash flow is a non-GAAP financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, “Net cash provided by operating activities.”122
  • Appendix18
  • Non–GAAP ReconciliationEPS excluding Stock-Based Compensation and Acquisition-Related Expense, net(in thousands, except share and per share amounts)19Three Months EndedMarch 31, 2013Net loss attributable to common stockholders $(3,922)Stock-based compensation 29,907Acquisition-related expense, net 68Income tax effect of adjustments (9,113)Net income attributable to common stockholders, excluding stock-based compensationand acquisition-related expense, net$16,870Diluted shares 658,800,417Incremental diluted shares (1) 12,175,734Adjusted diluted shares 670,976,151Diluted net loss per share $(0.01)Impact of stock-based compensation and acquisition-related expense, net and the relatedincome tax effects0.04Diluted earnings per share, excluding stock-based compensation and acquisition-relatedexpense, net$0.03The following is a reconciliation of earnings per share excluding stock-based compensation and acquisition-related expense, net to the most comparable U.S. GAAP financial measure, “Net loss per share”:(1) Outstanding equity awards are not reflected in the diluted loss per share calculation for the three months ended March 31, 2013 because the effect would be antidilutive. However,those awards have been reflected in the calculation of diluted earnings per share excluding stock-based compensation and acquisition-related expense, net for the three months endedMarch 31, 2013 because they have a dilutive effect on that calculation.
  • Non–GAAP ReconciliationFree Cash Flow(in thousands, except share and per share amounts)20Three Months EndedMarch 31, 2013Net cash provided by operating activities $8,760Purchases of property and equipment and capitalized software (14,468)Free Cash Flow $(5,708)The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financialmeasure, “Net cash provided by operating activities”:1Q12 2Q12 3Q12 4Q12 1Q13Net cash provided by operating activities (TTM) $356,221 $392,517 $370,194 $266,834 $191,880Purchases of property and equipment and capitalized software (TTM) (45,932) (62,401) (69,778) (95,836) (97,221)Free Cash Flow (TTM) $310,289 $330,116 $300,406 $170,998 $94,659The following is a reconciliation of free cash flow (TTM) to the most comparable U.S. GAAP financial measure, “Net cash provided by operatingactivities (TTM)”: